Chinese authorities have vowed to take concrete measures to fully implement tax cut plans this year to ensure that tax burdens of all industries will be reduced.

The Government Work Report this year set out tax cut plans including lowering the value-added tax rate in manufacturing and other industries from 16 to 13 percent, and the VAT rate in transportation, construction and other industries from 10 to 9 percent.

Cheng Lihua, vice-minister of finance, said at a news briefing on Wednesday that the authorities would work to ensure that the tax cuts, which are set to take effect starting from next month, will be implemented in full.

As part of the tax cut measures, VAT eligible for deduction will be expanded to cover passenger transportation services. Meanwhile, taxpayers will be able to get their tax on real estate payments deducted in full on a one-time basis, instead of on two occasions in two years.

Cheng said the manufacturing sector will be the largest beneficiary of the tax cuts among all sectors.

"Manufacturing is also the fundamental sector of the national economy. The benefits of tax cuts in the sector will be passed on to more sectors through the industry chains and price mechanisms," she said.

Meanwhile, taxpayers whose main businesses are postal services, telecommunications, modern services and consumer services will receive a 10 percent additional VAT deduction before the end of 2021, the State Council decided at an executive meeting last week. The four sectors saw their VAT rate remain unchanged at 6 percent during this round of tax cuts.

Sun Ruibiao, vice-minister with the State Taxation Administration, said the measure was in fact a temporary incentive policy to ensure the tax burdens of the four sectors will only go down in this round of tax reform.

This round of VAT reform, which is set to unleash a total tax cut of 1 trillion yuan ($148 billion), will at least double the total amount tax cuts that was previously rolled out, said Wang Jianfan, head of the tax policy department of the Ministry of Finance.

He noted that cutting the number of VAT brackets from three to two could require continuous efforts, and it would also be closely related to factors including economic growth and a change in tax regimes.

Related

Go to Forum >>0 Comment(s)